April 18 (Bloomberg) -- Russian stocks rose the most in
more than three weeks and bonds gained after talks on Ukraine
yielded an agreement aimed at easing the conflict. The ruble
weakened after surging the most this month yesterday.

The Micex Index added 2 percent to 1,356.54 by the close in
Moscow, the most since March 25 and trimming this week’s decline
to 0.4 percent. The yield on Russia’s ruble debt due February
2027 fell 17 basis points to 9 percent, the lowest in a week.
The ruble declined 0.1 percent against the central bank’s basket
of dollars and euros to 41.6642 by 6 p.m. The currency gained
1.4 percent yesterday.

Talks in Geneva between representatives of Russia, Ukraine,
the U.S. and the European Union ended with an agreement to “de-escalate tensions and restore security,” according to a joint
statement yesterday. The U.S. and its European allies have
threatened to increase sanctions on Russia if it doesn’t act to
calm the situation in eastern Ukraine.

“An agreement was achieved and this has reduced the
tension,” Oleg Shagov, head of equity research at OAO
Promsvyazbank, said by phone. “It looks like Russia won’t see
new sanctions in the short term.”

Deadly clashes in eastern Ukraine this week halted a record
inflow of money into the Market Vectors Exchange-Traded Fund.
Investors pulled $34 million from the ETF on April 16, the first
outflow since March 3. Last month saw a record $574 million of
inflows, according to data compiled by Bloomberg.

The Obama administration told asset managers last week that
it was planning additional sanctions against Russia over the
conflict in Ukraine.

Managing Risk

Officials from the Treasury Department and the National
Security Council met in Washington with mutual-fund and hedge-fund managers, according to a person who attended. Their
comments sent a message that more sanctions are on the way and
that investors, if they were concerned about the impact, should
manage that risk, said the person, who asked not to be
identified because the discussions weren’t public.

OAO Novorossiysk Commercial Sea Port surged 10 percent to
2.43 rubles, the highest since Feb. 28. Russia may split the
port into two entities under control of different shareholders,
Vedomosti reported today, citing an unidentified government
official.

State-run OAO Transneft will buy out the company’s oil and
oil-products terminals for up to $1 billion, while privately
owned Summa Group will get control over Novorossiysk seaport,
which will only keep non-oil terminals, Vedomosti said.

Ruble Weakens

Equities on the Micex trade at 5 times estimated earnings,
the cheapest valuations among 21 developing countries monitored
by Bloomberg.

Russian investment is slumping on the threat of sanctions
and geopolitical risks, Economy Minister Alexei Ulyukayev said
in Moscow today.

Ukraine’s hryvnia weakened 1.3 percent to 11.30 per dollar
in Kiev, the first drop in five days. The Ukrainian Equities
Index rose for a second day, adding 1.1 percent to 1,105.65, the
biggest gain in a week on a closing basis.

The ruble weakened 0.2 percent against the dollar to
35.5440 and fell less than 0.1 percent against the euro to
49.1445. The currency is the second-worst performer against the
dollar this year among 24 developing-countries currencies
tracked by Bloomberg.

Putin, who annexed Ukraine’s Black Sea peninsula of Crimea
last month, yesterday rejected accusations from Ukraine that
he’d already deployed forces in the east of the country and said
he would fight to defend compatriots outside Russia. He said he
hopes he won’t have to send in troops.

“The ruble is in a slight correction today after
yesterday’s strong gains on the back of Putin’s dovish comments
and the Geneva accord,” Vladimir Osakovskiy, chief economist
for Russia at Bank of America Corp. in Moscow, said in e-mailed
comments. “If these are followed by real steps to de-escalate,
the ruble has a good chance of strengthening further, given its
underperformance against other emerging currencies this year.”